Doi Moi II: Rule of Law and State Legitimacy in Vietnam

“Vietnam has the opportunity to define a next-generation model of liberalized development.”

By Le Vinh Trien and Kris Hartley for The Diplomat

July 14, 2017

Vietnam’s economic development since the 1986 Doi Moi reforms has been a model of progress for the country’s ASEAN peers. Since 2000, Vietnam’s yearly GDP growth has averaged 6.4 percent, pushing the country to middle-income status at an impressive pace. Vietnam’s emerging market status, consistent policy trajectory, and economic ambitions make the country a magnet for foreign direct investment, funding its rapid advancement through development stages.

However, progress on reaching Vietnam’s full economic potential could be accelerated further by strengthening anti-corruption measures. Fighting corruption is crucial to ensure the legitimacy of political parties and state institutions, but such efforts are weak without a consistent and transparent rule of law. Heeding lessons from Asian Tigers South Korea and Taiwan, Vietnam has an opportunity – more than thirty years after Doi Moi – to embark on a new generation of progress: a “Doi Moi II” that introduces a Vietnamese brand of incremental democratization to help fight corruption and enhance institutional legitimacy. Such an effort would strengthen civil society’s confidence in government and sharpen domestic and international investment appetites.

Asia’s rapid growth is evidence that economic development and one-party government are not incompatible. For example, in Park Chung-Hee’s South Korea (until 1979) and the Kuomintang’s Taiwan (before 1991), as in modern-day China and Vietnam, rapid development was achieved under one-party rule. Obstacles to asset flow were targeted through market reforms and instituted by pragmatic thinkers at high government levels. As such, democratization is not always synonymous with free markets, but it can lead to reforms that strengthen investor confidence. A more rigorous application of rule of law, an approach already used to liberalize markets, can also be used to improve governance.

In Vietnam, growth facilitated by aggressive exploitation of cheap and idle resources is nearing an end, and the country must now plan for lower economic growth rates. Environmental costs notwithstanding, the mobilization of resources for growth has been facilitated by market liberalization, but the financial proceeds have accrued largely to economic and political elites. This has opened the door for the corruption that many now say must be eliminated. Market liberalization was not accompanied by the consistent and transparent application of rule of law in the political arena. While a privileged few won, modest trickle-down growth kept the striving majority satisfied enough not to agitate in the face of evident corruption. Can an “efficient markets” approach that liberated economic potential in the first generation of Vietnam’s opening-up reforms also liberalize political systems in a second generation of reforms?

Efficient Political Markets

Despite its towering economic progress, Vietnam is still an authoritarian state controlled by a single political party. As such, the application of the rule of law comes in principle at the pleasure or mercy of party leaders, and is not based solely on an unbiased and apolitical institutional structure. According to the concept of the rule of law, the law is above power and must be institutionalized as a check on private and potentially exploitative interests. Transparency and accountability are strictly enforced to ensure blind justice and the credible function of the state. Further checks then emerge beyond government, in the form of an independent press and a populace free to voice objections. These formal and informal institutions work in concert to restrain endemic corruption, but in one-party states the profile of systemic checks is incomplete.

In the early-1980s, the Communist Party of Vietnam (CPV) took an honest accounting of its economic effectiveness and recognized that its legitimacy was compromised by the failures of central planning. Subsequent economic liberalization opened new avenues for investment, but also for corruption; the CPV eventually responded by announcing anti-corruption initiatives. Following through, however, presented a theoretical dilemma: Suppress information by obstructing the judicial process and muting the press, or publicize findings and risk a loss of legitimacy. In the latter scenario, a popular backlash would damage the party image but could be met with the well-worn tools of repression: police brutality and crackdowns on speech. Corrupt individuals would then either retain their positions under cover of legal protection or be shifted to lower-profile roles without due prosecution.

Such endemic collusion allows vested interests to become entrenched and ossifies a web of interdependencies among individuals, agencies, and external interests. In the long run, even sincere efforts to fight corruption would be compromised by a lack of credibility stemming from a history of secrecy, favoritism, and political patronage. With legislation failing to reduce corruption, rule of law, judicial independence, and press freedom become essential to the circulation of information to voters and investors. As such, the legitimacy of state institutions, rather than that of individual political parties, should be the highest calling of political liberalization.

Asian Models of Political Liberalization

Modern-day Vietnam shares similarities with pre-democratized South Korea and Taiwan. With the exhaustion of gains from cheap labor, economic growth becomes difficult to sustain. Unleashing the creativity and entrepreneurial potential of the citizenry can help a country escape the so-called middle-income trap, a phenomenon in which developing countries reach an income ceiling below that of fully developed countries. South Korea and Taiwan avoided the trap, and at the same time democratized political institutions in the mid-1980s by embracing multi-party political systems and the rule of law. Such political reforms helped both countries to gain international credibility as investment opportunities and to achieve higher stages of development. Although neither South Korea nor Taiwan was communist prior to political liberalization, each serves as an exemplar of political transition. Arguably, Vietnam does not adhere to a strict definition of communism, the last significant vestiges of which are state-owned enterprises (SOEs) – famously inefficient, debt-laden, and an unattractive sell in equity markets.

The Doi Moi reforms set Vietnam on an unprecedented economic winning streak, buying the CPV several decades of legitimacy and popularity. However, in politics as in economics, trends are cyclical. With a Doi Moi II, the CPV can reaffirm the legitimacy of state institutions and earn the party a legacy of pragmatism and meritocracy – one largely enjoyed by Singapore’s People’s Action Party (PAP). The potential for economic growth would also be strengthened, as investors from developed (and multi-party) countries care more about durable state institutions than the passing legitimacy of a potentially vulnerable political party.

Highly publicized targeting of senior officials must not be the defining feature of anti-corruption efforts. More theater than substance, such cherry-picking paradoxically reflects the same ad-hoc application of law that typifies one-party rule. Fighting corruption should not be a brash, haphazard cavalcade of character assassinations, but a sober and systemic transformation. Deep reform institutionalizes legal processes so that the removal of corrupt officials is politically impartial; the process itself, consistent across individual cases, avoids capture by political interests or personal vendettas. It also helps government avoid the stigma of deploying a repressive apparatus, often a last resort and sign of desperation.

Such efforts are one aspect of what Doi Moi II could look like. More generally, freedom of political association and mobilization – for instance, allowing alternative political parties to organize – can and should be ensured, even in a system dominated by a single party. The CPV has championed an impressive and historic development process, and as long as it produces fresh and innovative policies, it should be confident about its legitimacy and competiveness – even in an open political arena. The elimination of restrictions, explicit and implicit, on the press and free speech is essential to fostering an open political arena, one that can further validate the CPV’s leadership through a free discussion of ideas. Competition in any form encourages innovation and improvement. Vietnam can achieve in the political arena what it already has in the economic one: pragmatic and efficient systems that improve material outcomes.

In an era when political parties around the world are turning inwards, embracing populism, and behaving irrationally, the rationality of durable state institutions should supersede the self-preservation interests of a single dominant party. Vietnam has the opportunity to define a next-generation model of liberalized development, for the benefit of her people and for the progress of ASEAN.

Dr. Le Vinh Trien is a Lecturer at the School of Government, Ho Chi Minh City University of Economics. Dr. Kris Hartley is a Lecturer at the Department of City and Regional Planning, Cornell University.